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How to Invest in Crypto without Buying Crypto
The cryptocurrency market is booming, but the prices of cryptocurrencies can be quite volatile. How do you invest in the crypto-economy without actually buying any coins?
The Bitcoin⚡️ Energy Standard
November 21, 2022
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If you want to invest in the cryptocurrency market, you have many options, including Bitcoin, Ethereum, and several altcoins. But there are also backdoors into the cryptosphere that may be used to learn more. If you want to invest in cryptocurrency but don't want to actually purchase any, here's what you need to know:
KEY TAKEAWAYS
Investing in cryptocurrency presents some new and unusual challenges.
Due to the high degree of volatility associated with cryptocurrency investments, some people opt to put their money into more tried and true investment vehicles instead.
Many mutual funds and stocks are available that are tied to the bitcoin industry, allowing you to indirectly participate in the market.
What Is Indirect Crypto Investing?
You may still get cryptocurrency without signing up for a cryptocurrency exchange account. Indirect bitcoin investments allow you to acquire exposure to the market without actually purchasing any cryptocurrency. Stocks, mutual funds, and exchange-traded funds are some examples of the conventional investment vehicles that are used for indirect investing (ETFs).
There are, once again, both benefits and drawbacks to think about, such as safety, costs, and the possibility of losses. You should think carefully about whether or not an indirect investment is worth it to you when considering whether or not to acquire cryptocurrencies via a third party.
Crypto ETFs and Mutual Funds
The first alternative to acquiring cryptocurrency outright is via investment funds. Grayscale Bitcoin Trust is one of the first significant participants in this offering (GBTC). It has some of the same features as an ETF but is treated quite differently under the law. But if you invest in GBTC via your brokerage account, you'll get the same outcome as if you bought a Bitcoin fund. The value of the investment will rise and fall in tandem with the fluctuating Bitcoin market.
The high expenditure ratio of 2% is a significant drawback of grayscale. Simply put, they add 2% to the purchase price of Bitcoin to cover the cost of keeping it in a wallet under your name. Avoid the 2% maintenance cost by doing it on your own.
Besides the aforementioned Bitwise 10 Crypto Index Fund, there are also the ProShares Bitcoin Strategy ETF (BITO), the Valkyrie Bitcoin Strategy ETF (BTF), the VanEck Bitcoin Strategy ETF (XBTF), the Global X Blockchain and Bitcoin Strategy ETF (BITS), and the VanEck Global X Bitcoin Index Fund (GBXB) (BITW). It is important to read the prospectus and understand the fund's fees and underlying investments since they might vary widely.
Cryptocurrency and Blockchain Stocks
Stocks of firms involved in the blockchain sector or those that invest in or hold bitcoin may provide investors with exposure to the cryptocurrency market.
Companies in the cryptocurrency business provide a variety of services, including mining, software development, and more. Bitfarms (BITF), HIVE (HIVE), Canaan (CAN), and Riot Blockchain (RIOT) are just a few of the stocks availablet, and more. Bitfarms (BITF), HIVE (HIVE), Canaan (CAN), and Riot Blockchain (RIOT) are just a few of the stocks available. The cryptocurrency exchange and stock market platform Coinbase (COIN) is a major player in the industry.
In the event of a general downward trend in cryptocurrency values, many cryptocurrency stocks tend to perform poorly as well. If you have any worries about your investing choices or goals, you should see a trustworthy financial adviser.
Bonus Tip: Credit Card Rewards
Finally, credit card rewards are a great way to add to your bitcoin holdings without having to part with any hard dollars. You can use your credit card as you like—swipe, touch, dip, click—and earn cryptocurrency in the process with a few different cards.
The BlockFi Rewards Visa Signature card, the Gemini Credit Card, and the Upgrade Bitcoin Rewards Visa card are all exceptional options for individual bitcoin holders. Both the Crypto.com and Coinbase exchanges provide rewards cards.
The personal SoFi credit card and the Venmo credit card are two examples of cards that provide you with a wide range of redemption possibilities, including bitcoin. Earning cryptocurrency as a credit card reward is like investing in cryptocurrency without really purchasing any. No matter what happens to the price of cryptocurrency, you still stand to gain since you didn't have to spend any money to get it.
What is Cryptocurrency?
Secure transactions may be made in what is known as "cryptocurrency," a digital or virtual currency established through the use of cryptographic procedures. There is no government or bank in charge of it, as there is with fiat currency.
What is Bitcoin?
Bitcoin, the first successful decentralized cryptocurrency, was founded in 2008 by an unknown person or group of people named Satoshi Nakamoto. It's a kind of digital currency that can be safely transferred from one user to another through the web.
Who is Satoshi Nakamoto?
The person or individuals behind the creation of the Bitcoin protocol and the first cryptocurrency in 2008 are often referred to by the alias "Satoshi Nakamoto." Nakamoto was active in the bitcoin and blockchain communities until about 2010.
Conclusion
Cryptocurrencies have been called "the next big thing" in technology. Those who want to get in on the new technology without taking undue risks might consider investing indirectly in crypto. This will increase the portfolio's diversification and help spread out the associated risk.
FAQ
Do I need a cryptocurrency wallet to make an investment?
To protect your bitcoin holdings, you need to get a wallet. However, if you want to test the waters before diving in headfirst, platforms like PayPal and Robinhood make it easy to acquire and store small amounts of cryptocurrency. However, the private key to these wallets is held securely by the wallet provider.
To what cryptocurrency does one have the least amount of difficulty allocating funds?
Ethereum is seen as a good cryptocurrency to invest in by many, particularly those just starting out in the industry. Since the value of Ethereum's currency (ETH) goes up with the number of active nodes on the network, we can assume that the price of ETH will go up as more decentralized applications (dApps) and other projects are built and launched on Ethereum.
In what timeframe can a single bitcoin be mined?
One bitcoin may be mined in around 10 minutes with the right gear and software, but this setup can be expensive and is only available to a select group of people. The average user can mine a bitcoin in 30 days, which is both common and reasonable.
That's all for today, see ya tomorrow! If you want more, be sure to follow our Twitter (@croxroadnews)
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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